HUMAN RESOURCE PLANNING

Chapter Three
Chapter Outline

 What is Human Resource Planning (HRP)

 Nature and importance of HRP

 The factors affecting personal planning

 The HR planning process

 HR demand forecasting technique

 Succession planning
 Human Resource Planning (HRP)
Human resource planning is understood as the process of
forecasting an organization’s future demand for and supply of the
right type of people in the right number.
- Strategic plan
- Action plan

“HRP is a process by which an organization

ensures that it has the right number and kind of
people at the right place and at the right time,
capable of effectively and efficiently competing
those tasks that help the organization achieve its
overall objectives”.- Robbins
 Evolving Roles of HRP

Broad & Proactive

Narrow & reactive Carried on contiguously
Once in a year Strategic activity
Administrative activity integrated with business strategy
Carried on in isolation Hire focusing on assessment of Individual potentials
Hire considering current skills and experience Strategic alliance with Recruiting firms, targeted
Coordinate with local newspapers and agencies universities
 Importance of HRP

 Future personnel needs

 Part of strategic planning
 Creating highly talented personnel
 International strategies
 Foundation for personnel functions
 Increasing investment in HR
 Resistance to change and move
 Unite the perspectives of line & staff managers
 Factors affecting HRP
 Types and strategy of organization
 Organizational growth cycle and planning
 Environmental uncertainties
 Outsourcing
 Labor market
 Type and quality of forecasting information
 Time horizon
 HR Planning Process
Environmen
t
Organizational
Objectives and
Policies
HR Needs HR Supply
Forecast Forecast

HR Programming

HRP
Implementation
Control and
Evaluation of
Surplus Program
Restricted Shortage
hiring Recruitment,
Reduce Selection,
hours, VRS, etc.
Lay off etc.
 Organization Objective & Policies

 Are vacancies to be filled by promotions from WITHIN or hiring

from OUTSIDE?
 How do the training and development objectives interface with
the HRP objectives?
 How to ENRICH employee’s job? Should the ROUTINE and BORING
jobs continue or be eliminated?
 How to DOWNSIZE the organization to make it more competitive?

 To what extent production and operations be AUTOMATED and

what can be done about those displaced?
 How to ensure continuous availability of adaptive and FLEXIBLE
workforce?
 HR Demand Forecast

Forecasting Technique
- Managerial Judgment
- Ratio – Trend Analysis
- Regression Analysis
- Work – Study Technique
- Delphi Technique
MANAGERIAL JUDGMENT
- Top-Down Approach
- Bottom-Up Approach
- Participative Approach
RATION TREND ANALYSIS

No. of Employees
Ratio
Year Production Inspector Inspector:
Production
-2 1500 150 1 : 10
Actual -3 1800 180 1 : 10
Last Year 2000 180 1 : 11
Next Year 2200 200 1 : 11
Forecast +2 2500 210 1 : 12
+3 2750 230 1 : 12
Calculated by references to forecast activity levels.
Calculated by applying forecast ratio to forecast activity levels.
REGRESSION ANALYSIS

Number of employees to be recruited in

Employee Size

proportion to projected sales or sales volume!

Sales
 Regression Analysis

 Presupposes a linear relationship between

independent (casual) variables and dependent
(target) variable, e.g., HR demand
 Linearity is the relationship between the
independent and dependent variables

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 Regression Analysis
Y = dependent variable (HR demand)
A = constant (Y intercept)
B = slope of linear relationship between X and Y
X = independent variable (e.g. level of sales)

B
Y – Dependent Variable

A
X – Independent Variable
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 Regression Prediction
Y = A + BX
Y = dependent variable (HR demand)
A = constant (Y intercept)
B = slope of linear relationship between X and Y
X = independent variable (e.g. level of sales)

ത ሻ (𝑌
σ 𝑋𝑌− 𝑁ሺ 𝑋 ത)
Where

𝐵=
σ(𝑋2) − 𝑁(𝑋 ത )2

14
 Exercise
Data

X Y
Sales # of Marketing Personnel
($ Millions)
2.0 25
2.5 28
3.5 30
5.0 38
6.5 54

5 Sets of observations

15
 Exercise Step 1
Calculate XY, X2, average X and average Y

X Y XY X2
Sales # of
($ Millions) Employees
2.0 25 50 4.00
2.5 28 70 6.25
3.5 30 105 12.25
5.0 38 190 25.00
6.5 54 351 42.25

19.5 175 766 89.75

Average X = 19.5/5 = 3.9 Average Y = 175/5 = 35

N=5

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 Exercise Step 2
Calculate the value of B (slope of the linear relationship between X
and Y)

XY X2 N=5 Average X = 3.9 Average Y = 35

50 4.00
70 6.25
105 12.25
190 25.00
351 42.25

766 89.75

766 − 5ሺ 3.9ሻ (35) 766 − 683

𝐵= 𝐵=
89.75 − 5(3.9)2 89.75 − 76.05
ത ሻ (𝑌
σ 𝑋𝑌− 𝑁ሺ 𝑋 ത) 𝐵= 6.09
𝐵=
σ(𝑋2) − 𝑁(𝑋 ത )2
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 Exercise Step 3
Calculate A (constant or intercept)

Average X = 3.9 Average Y = 35 B = 6.09

IF AND
Y = A + BX A = 35 – (6.09)(3.9)

ത − 𝐵𝑋
𝐴= 𝑌 ത
Then A = 11.23

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 Exercise Step 4
Determine the regression prediction equation

Y = A + BX Independent causal variable X

(e.g., sales) AND
A = 11.23
Dependent variable Y
B = 6.09 (e.g., predicted # of personnel)
X = Independent Variable
Even if sales are zero the value for
Y = 11.23 + (6.09)(X) A is 11.23 (round to 11.0) or 11
persons.

For every increase unit ($1 Million)

sales (X) there is a predicted
increase of 6.09 staff (Y)
associated with that change.

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 Exercise Step 5
Calculate predicted HR demand (Y) by inserting values for X

Predict the HR demand for personnel at $8 million and $10 million.

Y = A + BX $8 million $10 million

A = 11.23
B = 6.09
Y = A + BX Y = A + BX
X = Sales ($M) A = 11.23 A = 11.23
Y= 11.23 + (6.09)(X) B = 6.09 B = 6.09
X=8 X = 10
Y = 11.23 + (6.09)(8) Y = 11.23 + (6.09)(10)

Y = 59.99 Y = 72.18
60 Staff required 72/73 Staff required

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WORK STUDY TECHNIQUE

Activities Required
Workforce

Planned output for next year 20000 units

Standard hours per unit 5
Planned hours for the year 100000
Productive hours per man/year 2000
Number of direct workers required 50
(100000/2000)
• L: Number of laborers/personnel required
• T: Total TUEs handled in a given time period
(e.g., per day or month)
• S: Standard time to handle 1 TUE (in hours)
• H: Average working hours per laborer per
day
• A: Allowance factor (e.g., 15% = 1.15)
• E: Efficiency factor (e.g., 85% = 0.85)

• L=
Example
Let’s assume:
• Port handles 1,200 TUEs/day
• Standard time to handle 1 TUE = 1.2
hours
• Average working hours per laborer/day = 8
hours
• Allowance factor = 1.15
• Labor efficiency = 85% or 0.85

What would be the required number of labor?

DELPHI TECHNIQUE
Question
s Several answers to the
required Q
Answers need to be:
Initial 1 2 3 4 5 - Anonymous
a a a a a - Only visible for the modera
Round

Reformulation of
Round answer in order to Reformulation is done by
X narrow the points anonymous moderator
of view

Some Experts:
1 2 3
- Evaluates if they agree
x x x to the reformulation
- Narrow their points of
view
Reformati
Reformation is done by
on
the same anonymous
moderator
Synthesis
 Supply Forecast
 Existing Human Resource
 Internal Sources of Supply
 External Sources of Supply
 Succession Planning
 Analysis of the demand for managers and professionals by
company level, function and skill.
 Audit of existing executives and projection of likely future supply
from internal and external sources.
 Planning of individual career paths based on objective estimates of
future needs, and drawing on reliable performance appraisals and
assessments of potentials.
 Career counseling undertaken in the context of a realistic
understanding of the future needs of the firm, as well as those of
the individuals.
 Accelerated promotions, with development targeted against the
future needs of the business.
 Performance related training and development, to prepare
individuals for future roles as well as current responsibilities.
 Planning strategic recruitment, not only to fill short-term needs but